Akron’s medical real estate attracts national attention from buyers and brokers
The Akron region’s strong healthcare industry is attracting some national attention, and more seems to be on the way as domestic investors target medical real estate in and around the city.
Fairfield Asset Advisors, a Denver-based real estate advisory firm that works with medical facility owners and buyers / investors across the United States, says it has found fertile ground for its work in town and has produced a series in sales that she negotiated around Akron. .
“Akron, Ohio, as you’ve seen, has definitely been good for us,” said Ben Whitney, senior analyst for Fairfield and his contact for his work in the region. “We have a $ 13 million ophthalmology deal and an $ 8 million orthopedics deal.”
Over the summer, Fairfield sold four ophthalmology centers with a total of 32,700 square feet of space – at 4099 Embassy Parkway in Fairlawn, 4277 Allen Road in Stow, 4441 Hudson Drive in Stow and 2013 State Route 59 in Kent.
Whitney said her company did not release the names of buyers and sellers she worked with. But the addresses of the properties sold show that three of the locations are home to northeast Ohio eye surgeons and the fourth, on Hudson Drive, is listed as the site of the Saint Clare Eye and Laser Surgery Center.
Then, in September, Fairfield sold two orthopedic facilities totaling 26,500 square feet for a combined price of $ 8 million, Whitney said. These included a 22,000 square foot facility at 2007 State Route 59 in Kent, listed as the address of the Crystal Clinic Orthopedic Center; and at 72 Fifth St. SE in Barberton, also a Crystal Clinic location.
None of the vendors responded to sales inquiries, but medical practices at the locations will not be affected; they will simply become tenants from a new owner, Whitney said. The quality of tenants and their leases is what makes property value in the first place, and leases are the main assets that attract investors, he noted.
The buyers of the properties were both out of state, with Flagler Investments of Florida listed in Summit County records as the buyer of the ophthalmology sites, and Kansas-based Crown MedRealty Partners buying the orthopedic sites.
Flagler representatives could not be reached, but Crown MedRealty managing partner Brian Beggs said his company was drawn to the properties housing the Crystal Clinic operations because he viewed them as a strong tenant. within an attractive specialist practice.
“For us, it’s kind of a combination of several things. Either it’s a long-term lease with a health system, the Cleveland Clinic or someone like that, or it’s a long-term lease with a leading specialty clinic – and the Crystal Clinic is known to be that, ”Beggs said.
Crown MedRealty closed its first transaction in Ohio about five years ago, when it purchased the Mercy Hospital in Massillon, which is now owned by the Cleveland Clinic and is a tenant of Crown MedRealty, Beggs said.
Beggs says he would like to buy more medical real estate in the Akron area, in part because it’s more efficient to manage multiple properties in or around one location.
“We sure are,” Beggs said, when asked if he is looking for more medical properties here. “We are looking nationwide, but our strategy is that once we have acquired in an area, we continue to look for more assets in that area because that allows us to operate more properties efficiently. … I think we will be more active there. “
Crown MedRealty owns approximately 1.5 million square feet of medical real estate in 43 states, representing investments totaling $ 650 million, according to Beggs. “We now have 12 transactions in Ohio, so it’s going up among our biggest states,” he said.
But there is a growing demand for medical real estate in general, in Akron, Ohio and across the country, said Beggs and others – with many other investors favoring it for the same reasons his business is.
Tenants in medical real estate are “sticky,” Beggs said. They have established patient bases close to their offices, they are often located in specially designed facilities, and they don’t like to relocate.
Customers of medical tenants almost always pay their bills too, often through government entities or insurance companies, Beggs said. Add to that the fact that medical services are in demand no matter what the rest of the economy does, and you have the recipe for a reliable tenant base, he added.
“People are getting sick everywhere, people are breaking bones everywhere and people are having babies everywhere,” Beggs said.
That said, Beggs and Whitney both said Akron was above his weight, with a particularly strong healthcare industry – and both said they intended to do more business in the Akron region.
But buyers face increasing competition for medical real estate, which has become popular with investors for some of the very reasons Beggs suggests, says Peter Volas, senior director of real estate at the Cleveland Clinic.
“You have investors looking for investment opportunities, and healthcare has always been that industry that’s sort of secure from an economic standpoint,” Volas said.
But as prices rise, the returns available to these investors are reduced, he said, noting that he is now seeing “unheard of” cap rates below 4% in markets such as New York and San. Francisco.
At the same time, health care continues to account for a growing share of the country’s gross domestic product, while hospitals and practice groups continue to consolidate and consolidate into larger groups, resulting in further consolidation and consolidation. which can lead to more real estate sales.
“When they buy the business (medical practice), they have to deal with the real estate,” Volas said, and some investors choose to sell it.
Some practice groups, and to a lesser extent hospitals, view their real estate as something that can be monetized through sale / leaseback agreements, Volas and Whitney said.
“You have all that momentum and then you get people competing for properties,” Volas said. “They are getting very aggressive with the purchase prices.”
Although the clinic does not plan to sell any of its current facilities and prefers to own its real estate, Volas said the trend of others to sell their real estate and of investors looking to buy it is expected to continue.
“I don’t think it’s going to slow down,” Volas said. “And I don’t think the markets are important, whether it’s Akron / Canton, Cleveland or Indianapolis.”
Whitney said he knows many enthusiastic buyers across the country besides Crown MedRealty who are reportedly interested in more healthcare real estate around Akron or northeast Ohio in general, if he could find properties to sell them.
“Akron is now in our Top 100 MSA,” Whitney said. “So it’s definitely a place where we’re looking to do more.… It’s a hot market.”